The market price of a good equates the (marginal or total) cost of production an

Question

The market price of a good equates the (marginal or total) cost of production and the (marginal or total) value that consumers attach to a unit of the good. Because the price also reflects the (production cost/opportunity cost/accounting cost) of the resources employed to produce the last unit, consumers will value the last unit until they purchase at least as much as they would value any other good that those resources could have produced. These characteristics of perfectly competitive markets guarantee (allocative or productive) efficiency.

Explanation / Answer

The market price of a good equates the (marginal or total) cost of production and the (marginal or total) value that consumers attach to a unit of the good. Because the price also reflects the (production cost/opportunity cost/accounting cost) of the resources employed to produce the last unit, consumers will value the last unit until they purchase at least as much as they would value any other good that those resources could have produced. These characteristics of perfectly competitive markets guarantee (allocative or productive) efficiency.

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